Wildfire Wipes out a Third of Power from Canada’s Oil Sands

05/06/2016

Forcing tens of thousands of people to evacuate in what may become the country’s costliest catastrophe, electricity flowing from plants at Canada’s oil sands operations has shrunk by almost a third as a wildfire ravages the region.

At about 7 p.m 950 megawatts of power to the region was being supplied by cogeneration plants that use the steam from Alberta’s oil sands production said The New York time on Thursday. This electricity grid data was compiled by Bloomberg.

That showed that the production was down 29 percent from three days ago. Data compiled by Bloomberg New Energy Finance show that in the meanwhile, natural gas output in the province has dropped by a half-billion cubic feet a day since late April.

The power and gas drop-offs show how the impact of a blaze wreaking havoc in Canada’s most energy-rich region extends beyond its crude supply even as the fire may affect more than a million barrels of oil sands capacity a day. It has seen a slight decline in gas demand as people leave the area and customers scale back operations, said Pipeline operator TransCanada Corp. According to New York consulting firm Pira Energy Group, the volume of gas burned by oil sands companies may shrink by 150 million to 300 million cubic feet a day.

“The wildfires southwest of Fort McMurray have caused significant output reductions in the oil sands, which will have some gas demand and site-related power load implications. There’s potential for a two- to three-week production decrease until crews are able to return safely to their respective facilities, once given the all clear,” said John Ell, senior natural gas analyst at Pira Energy Group in New York.

Down from as much as 177 megawatts earlier this week, data from the Alberta Electric System Operator show, the cogeneration plant at Suncor Energy Inc.’s MacKay River oil sands complex was supplying a single megawatt on Thursday. Flows that had been falling since the weekend reached zero on Thursday from a 220-megawatt plant at a site run by Cnooc Ltd.’s Nexen.

The company statements make it clear that both of the companies are among those that have halted or curtailed production in the region. Ell said that the decline was also compounded by a shutdown at Royal Dutch Shell Plc’s oil sands operations.

“If we see less power hitting the grid that means the facility is slowing down,” Het Shah, a Bloomberg New Energy Finance gas analyst, said by e-mail.

Ell said that as there are two high-voltage ones running between Fort McMurray and southern Alberta, the fires may threaten nearby electric transmission lines.

“One of those appears to be turned off and not yet returned to service,” he said, adding that an outage may limit exports into British Columbia and Montana.

Data compiled by Bloomberg show that spot natural gas at a hub in Alberta fell 3.6 percent on Thursday to $1.07 per million British thermal units. It had closed at a nearly seven-week high a day earlier.